“The business of rapid transition”

Better get the full disclosure in here – Prof Newell was external examiner on my PhD, and also a referee for the job I am about to start. So if this were totally pants, I would be unlikely to say so.

This is not totally pants. It’s not even a little bit pants (but MRDA, obvs).It’s one of those WIREs reviews where someone who is all over the literature synthesises it, categorises it and points out different things you could read, and some of the gaps.

Newell P. The business of rapid transition. WIREs Clim Change. 2020;11:e670. https://
doi.org/10.1002/wcc.67

Newell P. 2020. The business of rapid transition. WIREs Clim Change. 2020;11:e670. https:// doi.org/10.1002/wcc.67 

Newell points out that business has been “in” the climate politics since (before) day one. But that

something has changed. The scale and depth of the challenges facing business have intensified in ways which force us to refocus our research on questions of urgency and speed, as well as the growing need for new and alternative business models and a fundamental re-balancing of the economy including processes of industrial conversion. This is a process the current coronavirus crisis has already set in train. At the same time, greater attention will need to be paid to how businesses adapt to the growing severity of global heating and climate related disasters that results from decades of intransigence and the dominance of business as usual politics and business. What has driven this change is an acknowledgement that we are now in a climate emergency, as the IPCC SR15 (2018) and many other scientific studies have highlighted (Steffen et al., 2018). Around the world, from the local to national levels, government authorities are declaring climate emergencies and seeking strategies for rapid transition to act accordingly.  (Newell, 2020: 2) 

And, with emphasis added below, it’s a less monolithic than you’d would be smart to think.

Business represents the great paradox of rapid transition. On the one hand, much is expected of business in terms of technological innovation, new models of financing and shifts in business models to adjust to this new reality. On the other hand, many corporate actors are moving slowly, or deliberately seeking to delay action on climate change because they profit so much from the status quo, as many of the examples below illustrate, and current bailouts for oil companies and airlines as a result of Covi-19 underscore. Yet business is clearly not a monolithic and homogenous sector, even if sometimes treated as such. Very different dynamics apply to businesses of different scale and ownership structure, from micro social enterprises to medium cooperatives and large shareholder owned corporations. They are also located in different political economies and subject to different governance regimes which all have a bearing on what is expected of them and how much room for maneuver they have to innovate and adapt (Mikler, 2009; Mikler & Harrison, 2012) (Newell, 2020:  2) 

And here’s what he sets out to do – and does.

In this paper, as well as attempting to review relevant academic literature, given the recent and contemporary nature of some aspects of this debate, I also cite from grey literature and media imaginative examples of business-led rapid transition. I argue that while there is a large literature dealing with business responses to climate change from a range of perspectives and disciplines from business and management studies to sustainability scholars and political scientists, covering issues such as corporate strategy and public policy engagement, the question of the nature and speed of change now required, and whether there are historical and contemporary precedents for accelerated transitions within and beyond business must assume a more central place in our research. (Newell, 2020: 2) 

Looking within and across firms to appreciate how they understand and engage with risks might be helpful in understanding the capacity and likelihood that firms can accelerate transitions. Seeking to capture these dynamics across scales, Rickards et al. (2014) explore three interconnected scales: micro (which includes individual and interpersonal factors and worldviews); meso (which covers network, organizational and institutional factors including management paradigms and organizational culture, for example); and macro (which refers to a broad [page break] social, cultural, political, and economic factors). They conclude that senior decision-makers in government and business are “strongly focused on their ‘local’ professional context and near-term pressures, including reputation among peers, relationships with competitors, and real-time financial status. As a group they exist within a largely closed circuit and perceive the world from a particular narrow perspective” that “occludes more systemic or reflexive thinking or action. This deep propensity for inaction suggests that a coordinated multi-frontal approach is essential for a new more effective mitigation approach” (Rikards, Wiseman, & Kashima, 2014, p. 753), highlighting, as others have done, the importance of alliances and coalitions to support and accelerate decarbonization (Roberts et al., 2018) the like of which we have seen developing in recent years, as discussed below. (Newell, 2020: 3-4) 

This looks interesting…

Other recent scholarship uses the language of amplification to develop a typology of eight processes which aim to increase the impact of initiatives for transformation: stabilizing, speeding up, growing, replicating, transferring, spreading, scaling up, and scaling deep (Lam et al., 2020). Although applied to urban transformations, it potentially provides a useful entry point for thinking about the role of business (Newell, 2020: 6) 

And a nice distinction between shallow and deep decarbonisation

Many firms can decarbonize without fundamentally changing their core products, technologies and systems: what some scholars have referred to as “shallow decarbonization.” “Deep” decarbonization, on the other hand, requires companies to discontinue the production of energy-intensive products, adopt alternative technologies, and change internal processes, for example. This sort of decarbonization “displaces an existing market, industry, or technology and produces something new and more efficient and worthwhile. It is at once destructive and creative” (Dolsak & Prakash, 2019) (Newell, 2020: 7) 

The omnipresent threat of soothing words/greenwash remains… (well, it would be omnipresent if it didn’t remain…)

The CEO of the Climate Leadership Council recently penned an op-ed insisting that oil and gas companies understand the scale of the challenge and “want to be part of the solution.” We are essential “partners” in the energy transition, the narrative goes. All the while, data from the International Energy Agency’s (IEA) new report on The Oil and Gas Industry in Energy Transitions shows that oil and gas companies continue investing against a clean energy transition, directing 99.2% of their capital expenditure toward fossil fuels in 2019 (OCI, 2020). (Newell, 2020: 7) 

Because the incentives (guard-rails) for investment decisions are, well, “strong”

This points to a more structural condition that needs to be addressed. The expectations of returns on investment built into conventional shareholder ownership structures tend to trump most other considerations in business, severely limiting the possibilities of rapid transition. The current system of corporate ownership separates the legal ownership of companies from those with moral management responsibility. The shareholder model, geared primarily toward satisfying financial interests, is the main reason why the purpose of business has focused obsessively on a single bottom line. This implies the need for models with broader ownership and accountability, as well as changes in company law and corporate governance around the responsibilities and liabilities of directors and stronger mandatory requirements around reporting and disclosure and stress testing companies for their compatibility with reaching ambitious climate goals (Cogan, 2006). (Newell, 2020: 8) 

Various jobs for academics, including –

Finally, there is a scope for further modeling and theorisation of the reciprocal links between how climate change impacts on business (politically and as a geophysical phenomenon) and how businesses drive climate change and influence responses to it, all within shifting landscapes of politics, geopolitics, and currents of social mobilization that will shape their future license to operate. (Newell, 2020: 10) 

So, the last article I will read, probably, before starting The Job, and a fitting place to end….

References 

Bromley, P. S. (2016). Extraordinary interventions: Toward a framework for rapid transition and deep emission reductions in the energy space. Energy Research & Social Science, 22, 165–171. 

Ferguson, J., Sales de Aguiar, T. R., & Fearfull, A. (2016). Corporate response to climate change: Language, power and symbolic construction. Accounting, Auditing & Accountability Journal, 29, 278–304. 

Johnstone, P., & Kivimaa, P. (2018). Multiple dimensions of disruption, energy transitions and industrial policy. Energy Research & Social Science, 37, 260–265. 

Lam, D. P. M., Martín-López, B., Wiek, A., Bennett, E. M., Frantzeskaki, N., Horcea-Milcu, A. I., & Lang, D. J. (2020). Scaling the impact of sustainability initiatives: A typology of amplification processes. Urban Transformations, 3(2020), 2. https://doi.org/10.1186/s42854-020-00007-9

Mikler, J., & Harrison, N. (2012). Varieties of capitalism and technological innovation for climate change mitigation. New Political Economy, 17(2), 179–208. 

Rikards, L., Wiseman, J., & Kashima, Y. (2014). Barriers to effective climate change mitigation: The case of senior government and business decision makers. WIREs Climate Change, 5, 753–773.  

Roberts, C., Geels, F., Jordan, A., Lockwood, M., Newell, P., Schmitz, H., & Turnheim, B. (2018). The politics of accelerating low-carbon transitions: Towards a new research agenda. Energy Research & Social Science, 44, 304–311. 

Rogge, K., & Johnstone, P. (2017). Exploring the role of phase-out policies for low-carbon energy transitions: The case of the German Energiewende. Energy Research & Social Science, 33, 128–137 

Sapinski, J. P. (2016). Constructing climate capitalism: Corporate power and the global climate policy-planning network. Global Networks, 16, 89–111. 

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